Major Labels Shamed Into Promising To Give Some Of $105 Million Limewire Settlement To Artists

from the but-how-much? dept

After Limewire settled with the major labels last week, many of us questioned how much of that money would go to actual artists. Many people, quite reasonably, pointed to a quote from a few years ago from the RIAA's Jonathan Lamy saying, "Any funds recouped are re-invested into our ongoing education and anti-piracy programs." That line got a lot of attention, and I wondered if the labels would be forced to actually give some money to artists, and it appears that may be happening. Lamy came out and said that his quote was about something else -- the RIAA's lawsuits against individuals (hurray for suing fans!), rather than this lawsuit against Limewire. Now, the major labels are starting to step forward and say that yes, yes, yes, they'll give some of the money to artists. I'm guessing, at this point, that it's purely a crisis management type situation, where the labels are realizing they need to show that they're giving some of the money to artists (in part because all these stories mean that the artists themselves have started asking). So now that the labels promise to give some of the money to artists, let's see if they ever say how much actually goes to artists...

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Actually more interesting might be a breakdown, by artist, of the disbursements. Bet any money goes to the biggest, easiest to find acts, not to smaller groups. Also probably nothing to foreign acts which I'm willing to bet that the RIAA included in their calculation of alleged harm.

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Yep, exactly. MJ's estate and Britney will get the lion's share. Those thousands of downloads of, say, Ananda project (excellent deep house for summer listening, by the way)... whoops, we didn't notice them, sorry...

Luckily, lots of people will probably have been exposed to the smaller bands by infringement, so they don't have any actual losses.

Re: Part of an anti-piracy campaign must be lobbying

Now that they're close to getting all of their dream legislation passed, maybe they realize they can shift some of this money from lobbyist's over to the pretense of paying artists.

I think you would find that anything we look at as their dream legislation is actually only another click of the ratchet and they would just push for even more draconian legislation the second they can.

Pay the artists?

Of course they'll pay the artists! Maybe even a lion's share of the payout. Little artists first.

Of course, the little artists still haven't recouped the advance that the labels gave them, so the money will just go to that debt. How much do they owe? The labels aren't sure, but it's certainly more than the settlement share...

Re: Mike shows once again, how well the system works

So they got $105 million dollars when the labels and artists could have been enjoying billions of dollars in profits had they not destroyed there best hopes early on by embracing peer to peer technology and learned to profit from it but alas they have to settle for their $105 million.

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I'm not terribly sympathetic to the major labels, but I have to wonder how they should have capitalized on P2P technology and turned a profit?

This rather naive idea that the labels are under the creative direction of dinosaurs is false. I had dealings with a major label back in 2000 (long story, it wasn't me being signed or anything, I just had credits on a popular album that was picked up), but I can assure you that the staffs of record companies at the turn of the century were predominantly young, extremely hip, savvy people. Specifically Universal, who I dealt with. It isn't that they didn't understand P2P, it's that they understood it too well. They knew it was silly to think that they could monetize that stream.

Even today, no one seems to be able to explain what the labels could have done to effectively monetize it. Advertising? To people who are taking free stuff? Not exactly a demographic a third party selling products wants to focus on. I'm just not convinced P2P, or music on the internet in general, is something that can be effectively monetized on the scale large companies would require.

C'est la vie. My MO is to keep making music, and it's a great time for that. Maybe not for making money, but I made a lot of money back in the days I was haunting record labels; it doesn't really change your life.

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"Even today, no one seems to be able to explain what the labels could have done to effectively monetize it."

You mean they couldn't work out how to make as much money as they used to. Simply, they can't. Technology has significantly reduced the need for the services the labels used to provide. It's called disruptive technology for a good reason.

Also, given the labels' long and inglorius history of ripping off artists and consumers alike, it's hard to feel sorry for them now that their gravy train is rolling to a stop.

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You have a fair question, but it's hardly rocket science. Im not sure why you nor the major labels can see how to monetize p2p networks. Aren't you commenting on an article about a company that has to pay $105 million to the RIAA for infringement? It seems someone could monetize p2p.

Ok the Labels could have run their own p2p network. They could have promoted new artists with free tracks in a special "What's Hot" category. They could have sold ads for the freeware version of their software and offered a Pro and Gold version of the software at different prices. They could have gone beyond limewire. They could have even SOLD music like itunes does, but on their own software. They could have offered tons of cool perks for using their software.

Just a quick lesson for anyone who thinks someone getting a freebie is a poor target for advertising. If I am getting a $16 value for free, guess how much I have to spend on something else. Advertisers know this.

Try to say it with me now... The internet is GLOBAL. Think of the consumer base. Couple that thought with this....Distribution of digital goods has almost ZERO cost. The labels are under the creative direction of dinosaurs.

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"They knew it was silly to think that they could monetize that stream."

And yet, recently they've started making money from the likes of Pandora or iTunes. If they'd would have thought "hey, what can we do to have the internet work for our industry" instead of "how can we shut this thing down", they would have been in a much better spot right now.

There was a giant distribution forming and they chose to let it ride on plan A.

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"to the major labels, but I have to wonder how they should have capitalized on P2P technology and turned a profit?"

They couldn't have monetized p2p technology it has obsoleted them. P2P and other software effectively became the distribution chain, making the value of their services effectively nil. Other than their back catalogs they have nothing of value.

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The problem is the top down method of trying to enforce the world to the old way of doing business.

I believe Mike commented on the Big Four musical chairs. New ideas are very difficult to get to the CEOs and they frustrate the people that understand the technology.

Which of the CEOs do you think wanted to allow P2P technology? How about Bittorrent? This is the problem.

When you have legal options of distribution and no one will allow it because it's taboo, you have a bottleneck appear. The frustration of the labels is that they want to shut down p2p or wait 10 years to monetize it. The deadline has passed but all they can do is require more draconian methods of enforcing an old business model.

If they had allowed Napster, iMeem, or even Limewire to function, they could have made more money. But because of the rents of copyright and bad licensing, the venture capital is gone from the music industry. People would rather invest in the Googles than the RIAA.

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"Even today, no one seems to be able to explain what the labels could have done to effectively monetize it."

1. Not wasting money trying to ban the first MP3 players (Diamond Rio lawsuit in 1998), but to realise that this may be a wave of the future and prepare for it as the movies studios were forced to deal with VHS.

2. Adjust licensing models to take advantage of the fact that the internet is not bound by physical boundaries.

3. Accept, rather than fight, Apple's attempts to launch iTunes.

4. Not insist on DRM that fragmented the early digital market and led to Apple's dominance and frustrated many consumers to the point where it was easier to pirate than buy legally.

5. Recognise that the far lower overheads of digital music made it a more lucrative market if handled properly.

6. Realise that Napster's success was not due only to the "free!" aspect, but also the immediacy, range and discoverability of both new and old music.

7. Not suing their own damn customers!

8. Not trying to enforce the pricing models that worked for physical media onto less valuable digital media.

9. Recognise that freedom to buy individual tracks rather than enforced bundling would lead to lower revenue in some areas (especially the soulless pop albums with 2 hits and 10 tracks of pointless filler) and adjust their business models accordingly.

10. Work with new innovators in the market rather than pricing them out of it.

11. Realise the allofmp3's service had value well beyond the pricing and adjust their models to give customers what they actually want.

12. Realise that the internet allows a lot of niche markets that are being well serviced by pirates and ignored by labels when they could easily be offered (e.g. the oft-demanded FLAC files for audiophiles with money to burn).

There's many other things, but that's a start. I was saying pretty much the same thing back in 2000 myself as well, so those "young, hip people" you're think of were, to put it frankly, morons who helped destroy their own industry. Bravo.

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The RIAA is most likely going to divvy the proceeds up the same way they do some license fees. The most popular acts in each region--calculated by radio airplay--will get the money. Kind of silly--and maybe a bit ironic--because the artists who get the most play probably aren't really hurting for any money, though they might in fact be the most pirated. They're certainly not poor starving artists.

Something tells me that the Red Hot Chili Peppers are somehow going to make bank.

This money should be spent on music education in public schools. It should also be used to to make sure recordings locked away in vaults are being properly preserved. It should be spread around to ease licensing fees for small venues; the kind that actually book and pay struggling, starving artists. It should be used for the benefit of society. It shouldn't favor any specific artist.